BOCA RATON, Fla. — On Feb. 21, the Colgate-Palmolive Company, owner of Hill’s Pet Nutrition, spoke at length about its pet segment during the Consumer Analyst Group Of New York (CAGNY) Conference in Boca Raton, discussing its key growth strategies and how the company will realize them.
Hill’s growth strategy is comprised of four key goals: accelerating growth through improved brand building and core innovation; innovating to gain share in high growth segments and adjacencies; investing to drive penetration in growing populations; and maximizing growth online.
Investments to marketing and advertising have paid off for Hill’s, explained Yvonne Hsu, marketing director for Hill’s Pet Nutrition’s United States division. As these investments have gone up, so has the company’s net growth over the past two years, according to Hsu.
“A few years back, we moved to a digital-first approach, as well as being more data-driven in our media planning, so not only have we changed our investment posture, but we’ve gotten more effective and efficient with how we do our media planning so we can meet every pet parent in America with our messaging,” Hsu said.
For product innovation, the pet food company is homing in on wet diets as well as small dog nutrition.
“Wet continues to be an opportunity for us, and this year we are launching into cat wet pouches. It delivers on pet parents need for convenience, to have a single-serve offering and to deliver great taste with our chunks and gravy formulations,” Hsu said.
Additionally, Hill’s is investing in the research and development of nutritional solutions for “small paws,” or dogs under 20 lbs. “They’re almost 50% of the global [dog] population today,” Hsu said, adding that small dog ownership is growing about 3% over that of other sized dogs.
In August 2019, the company broke ground at its Small Paws Center in Topeka, Kansas, an undertaking of approximately $20 million.
“We’re looking at differences in taste, differences in physiology, seeing how these small paws actually even eat differently, and so you will see more innovation coming from this space in the next couple of years,” Hsu said.
“But in the meantime, we have innovation that’s launching now. We’re extending our successful small paws range, as well as bringing small bites into our successful Science Diet range,” she added.
This includes small paws kibble diets and wet trays, which are currently available in the US. Hill’s will be expanding those trays to the market in Japan, where small dogs make up more than 75% of the total dog population, Hsu said.
The company also rolled out reformulations, new kibble shapes and repackaging to its Hill’s Science Diet line in Europe in late 2019, where it’s called “Science Plan.” The company said it plans to extend the updates to the rest of its markets throughout 2020.
To drive growth in e-commerce, Hill’s is focused on two main strategies: new customers and autoship conversion. The company has already increased its e-commerce revenue nine-fold since 2014.
The company launched a home delivery service in 2019 that runs through veterinary clinics, giving veterinary professionals the ability to recommend Hill’s diets, then have them shipped directly to clients through the service. This is bolstered by a subscription model, which drives repeat purchases.
During Colgate-Palmolive’s fourth quarter earnings call on Jan. 31, Noel Wallace, president and CEO of the company, explained, “We established a new direct-to-consumer business with Hill's to Home, which provides a fast and easy way for veterinarians to sign patients up for Prescription Diet. It's a new subscription model that increases compliance.”
These platforms, paired with a focus on optimizing search results, conducting A/B testing, and incentivizing subscription and autoship purchases are all tactics Hill’s is using to increase its online presence and revenue.
Hsu concluded, “So our focused strategies, our increased investment, and our simple, science-based messaging is helping us to deliver great growth at Hill’s.”
Overall in Colgate-Palmolive’s fourth quarter, the company earned $4.02 billion in net sales, up 5.5% from year-ago sales. Total sales for Hill’s were $680 million in the fourth quarter, up 8% over year-ago sales.
Read more about corporate strategy, financial performance, mergers and acquisitions on our Business page.